The overnight fall on Wall Street further dampened investors' risk appetite. This was compounded by a World Bank report which revised downwards its global growth forecast to a contraction of 2.9% from -1.7%.

Hong Kong's Hang Seng Index fell 2.89% to 17,538.37 points, Japan's Nikkei 225 lost 2.82% to 9,549.61 points, South Korea's Kospi gave up 2.80% to 1,360.54 points, Singapore's Straits Times Index fell 1.8% to 2,226.10 points and the Shanghai Composite Index was down 0.12% to 2,892.70 points.

European stock markets opened weaker but managed to stage a mild recovery later.

On the commodities front, crude oil futures fell 50 cents per barrel to US$67 (RM237.85) as at 6.15pm yesterday, while crude palm oil futures surged RM140 per tonne to RM2,298 for August delivery and RM129 per tonne to RM2,286 for September delivery on the back of rising soybean prices.

At Bursa Malaysia, the Kuala Lumpur Composite Index managed to end the day just 1.49 points lower at 1,044.48 points, after falling to an intra-day low of 1,028.14 points, on some fund-buying of key big-cap stocks.

Trading volume was 1.37 billion shares valued at RM1.52 billion. Losers led gainers by 451 to 214, while 204 counters were traded unchanged.

The major losers included Bumiputra-Commerce Holdings Bhd (BCHB), Sime Darby Bhd, MMC Corporation Bhd and EON Capital Bhd.

MIDF Research head Zulkifli Hamzah said some last-minute local institutional buying helped the KLCI recoup some of its earlier losses.

"However, if we look at our regional peers and the overall Asian markets, there is less optimism in the near future. While there is still sufficient local liquidity to support the market, we are moving into a lull period in 3Q09 where there will be less activity," he said.

AmResearch said after rebounding 26% from its lows in March 2009, the KLCI was now negotiating a mid-cycle correction.

"This time around, the correction may be less dramatic because the starting point of the recent upswing was from a depressed trough price-to-earnings (PE) of 11 times in March 2009, versus 15 times in April 2001. In both instances, trough PB (price-to-book) was 1.2 times. Immediate term, market may dip 10% off June's high, forming a base at 980," it said.

"Fundamentally, we are unmoved. Negative earnings revision cycle is reversing. There are nascent signs of earnings upgrades taking hold, as evident from Institutional Brokers' Estimate System (IBES) consensus estimates for 2010. Further traction is expected as analysts have historically underestimated the strength of an earnings upcycle," it added.

AmResearch raised its fair value from 1,050 points to 1,190 points by rolling over the valuation base into 2010 on an unchanged PE of 15 times.

BCHB fell 30 sen to RM8.75; Sime Darby lost 10 sen to RM6.75 and MMC fell six sen to RM1.85.

EON Capital Bhd, whose corporate proposal was rejected by Bank Negara on Monday, fell 12 sen to RM4.70; Public Bank Bhd and YTL Corporation Bhd lost five sen each to RM8.75 and RM6.65, while IOI Corporation Bhd slipped two sen to RM4.52.

Other losers included Malaysian Pacific Industries Bhd, Nestlé (M) Bhd, KFC Holdings (M) Bhd and Degem Bhd.

The top gainer yesterday was Tan Chong Motor Holdings Bhd which rose 35 sen to RM1.90. DiGi.Com Bhd added 30 sen to RM22, PacificMas Bhd gained 26 sen to RM3.08, while Tanjong plc and Top Glove Corporation Bhd put on 20 sen each to RM13.40 and RM6.50, respectively.

Samchem Holdings Bhd, which made its debut on Bursa Malaysia yesterday, jumped 19 sen to 90 sen. It was also among the most actively traded stocks with 56.8 million shares done.

KNM Group Bhd topped the actives list with 128.9 million shares traded. The stock fell half a sen to 80.5 sen.